ADMIS News
COCOA
December Cocoa extended yesterday’s selloff overnight and traded to its lowest level since August 19. The market is awaiting the West African main crop, which is expected to start this month. Interviews of farmers in Ivory Coast has been mostly positive toward output. The region had seen some dry conditions in August that led to a runup in prices, and reports that heavy rains last week had boosted the crop’s development have had the opposite effect. The country is in its rainy season, which runs officially from April to mid-November. Farmers told Reuters they would start harvesting next week. Conditions seem to have turned drier this week. World Weather Service says rainfall is still short in southern Ivory Coast and Southern Ghana and that this may continue through the first half of September, which may raise reignite concerns about production. Ghana is expected to raise its farmgate price 45% this season, which they hope will pull in supply for export and prevent smuggling out of the country.
COFFEE
December Coffee was higher overnight after a five-day selloff from contract highs. London robusta prices were also higher. Tropical storm Yagi is expected to become a typhoon later today and a strong typhoon (Category 3 hurricane equivalent) by Thursday as it moves from the Philippines to China. It could hit northern Vietnam arabica regions by Saturday, but it is expected to miss the Central Highlands, which is Vietnam’s main robusta region. The market is still underpinned by concerns that extreme heat earlier this year in Vietnam could reduce the upcoming robusta harvest. World Weather Service says the start to Brazil’s rainy season will be delayed somewhat, but not as much as two years ago. They expect improved rainfall in October and November. ICE arabica stocks fell 34,139 bags yesterday to 813,734, their lowest since July 24.
COTTON
December Cotton was lower overnight after the weekly Crop Progress report showed an improvement in US crop conditions last week. The report showed 44% of the US cotton crop was rated good/excellent as of September 1, up from 40% the previous week and 31% a year ago. The five-year average for this date is 43%. Texas was 36% G/E, up from 26% last week and 11% a year ago and above the five-year average of 29%. Georgia was 56% G/E, unchanged from last week. Arkansas was 73% G/E, down from 78% last week, and Mississippi was 51% G/E, down from 53% last week. The report also showed 95% of the crop was setting bolls and that 37% of the crop had bolls open. Texas had 37% open, Arkansas 68%, Louisiana 64%, and Mississippi 59%. Parts of west Texas received 0.5-1.5 inches of rainfall over the past 24 hours, while the Coastal Bend region received some as well, with locally heavy amounts. This could improve the conditions for west Texas but also delay harvest and cause some discoloration in the Coastal Bend. Outside market developments were mixed overnight, with the dollar lower and crude oil higher (positive for cotton demand) but US equity market lower (negative).
SUGAR
October Sugar was near unchanged overnight following yesterday’s recovery rally. It has held retracement support of its late-August rally off 17-month lows, which is a positive technical development. The market is supported by concerns over lower Brazilian production this year, but it is limited by expectations for recoveries in Thailand and India after the regions received ample rainfall this summer. Some sugar cane areas in Southeast China and Vietnam could be threatened by Typhoon Yagi this weekend. The Indian government is making a push to expand its production of corn-based ethanol and away from ethanol made from sugar cane in an attempt to make sure there is enough sugar for domestic consumption (but not necessarily for export). Ukraine’s sugar output is forecast to fall 1.55 million metric tons this year after an abnormal heat wave this summer impacted sugar beet yields. Average beet yield could fall to 46.5 tons per hectare, down 12% from last year. Sugar beet output is expected to fall to 11.8 million tons from 13.1 million last year.
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